Khera v Jones & Ors

LEGISLATION CITED : Legal Profession Act 1987 (NSW) s 208JA, s 208L

Atlas Corp Pty Ltd v Kalyk [2001] NSWCA 10 Cachia v Hanes (1994) 179 CLR 403 CASES CITED : Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361 Guss v Veenhuizen (No 2) (1976) 136 CLR 47 Larsen v Vile [1999] NSWCA 397

Jaswant (Jess) Khera (Plaintiff)

Ian Robert Durston Jones PARTIES : (First Defendant)

Peter Scammell & Peter Johnstone (Second Defendants)

Mr J Khera (Plaintiff in person) SOLICITORS : Mr I R D Jones (First Defendant in person)

LOWER COURT JUDICIAL OFFICER : Peter Scammell & Peter Johnstone

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11588/2004 - JASWANT (JESS) KHERA v IAN ROBERT DURSTON JONES & 2 ORS

JUDGMENT (Appeal decision of Review Panel - costs when solicitors acts for self) 1 MASTER: By amended summons filed 5 November 2004 the plaintiff seeks: firstly, an order that the determinations of the Costs Review Panel dated 6 May 2004 be set aside; secondly, that the costs of the Review Panel in the sum of $1,982.75, to be paid by the review applicant, be set aside; thirdly, that the original determination of costs made by Costs Assessor, Mr Ian Dwyer, dated 30 January 2004, in the sum of $22,099.71 be set aside; fourthly, that the costs assessment made by Mr Dwyer be remitted to him for redetermination with directions that the Assessor determine the assessment costs pursuant to the order made by this Court; fifthly, that the determination of costs of Mr Dwyer, in accordance with s 208JA of the Legal Profession Act 1987 (NSW) (LPA) issued on 30 January 2004 for the sum of $1,597.75 be set aside; sixthly, that the defendant pay the costs of the Costs Assessor in the sum of $1,597.75; and seventhly, that the defendant pay the costs of the Costs Review Panel in the sum of $1,982.75. 2 The plaintiff is Jaswant (Jess) Khera. The first defendant is Ian Robert Durston Jones. The second defendants are Peter Scammell and Peter Johnstone (the Costs Review Panel).

Grounds of appeal 3 The plaintiff appeals from the whole of the determination of the Costs Review Panel. The grounds of appeal are firstly, that the Costs Review Panel erred in law by failing to hold that the Cost Assessor failed to: firstly, assess the costs fairly and properly; secondly, determine that the defendant is not entitled to any costs; thirdly, determine the reasonable hourly rate for the defendant's solicitor; fourthly, take into consideration all the evidence to determine the hourly rate on the basis of the defendant's lost opportunity; fifthly, seek from the defendant all relevant evidence to enable him to determine the hourly rate on the basis of the defendant's lost opportunity; and sixthly, state the basis upon which certain items were apportioned and further failed to identify the items which were apportioned. 4 The plaintiff submitted that the Costs Review Panel erred in law by failing to firstly, properly consider the plaintiff's grounds for making the application for review as outlined in the plaintiff's application for review of costs assessment dated 22 February 2004; secondly, give reasons for rejecting the plaintiff's grounds for review; thirdly, incorrectly and improperly allowing the defendant's costs; fourthly, give reasons for allowing the defendant's costs; fifthly, incorrectly and improperly allowing the defendant an hourly rate of $250.00 per hour plus GST under the circumstances where there was insufficient evidence before it to correctly and properly allow the hourly rate of $250.00; sixthly, give reasons for allowing the defendant $250.00 per hour; seventhly, state the basis upon which certain items were apportioned; and eighthly, provide reasons for assessing the costs in the sum of $22,099.71. 5 Additionally, the plaintiff submitted that the Costs Review Panel failed to consider and hold that the document purposed to be a bill of costs, forwarded to the plaintiff through the defendant's letter dated 30 August 2003, was not a bill of costs because the said document was not dated and not signed or was not attached to the said letter -dated 30 August 2003- and this constituted an error of law. Finally, the Costs Review Panel breached the principles of procedural fairness by failing to take into consideration Exhibit 15, page 154, sub-paragraph 4(a) and this constituted an error of law. 6 From the plaintiff's notice of appeal and submissions, it is not clear whether the plaintiff is dissatisfied with a matter of law (s 208L) or is seeking leave to appeal (s 208M). As the plaintiff is a solicitor and has not sought leave, I shall take it that the appeal is under s 208L of the LPA. 7 It reads: "208L Appeal against decision of costs assessor as to matter of law (1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision. (2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or (b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application. (3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given." 8 The approach that should be taken by the court in an appeal from a costs assessor was set out in Larsen v Vile [1999] NSWCA 397 and Chapmans Ltd v Yandell (t/as Yandells) [1999] NSWCA 361. It is incumbent upon the applicant to establish, in relation to any relief claimed under s 208L of the LPA, that there has been some error of law in respect of the determinations made by the costs assessor and subsequently the costs review panel. As such, an appeal under s 208L of the LPA is confined to law.

The costs assessor's decision 9 The plaintiff and defendant are both solicitors. In this appeal they both acted for themselves. There is a history of acrimonious litigation between these parties. The bill of costs relates to costs orders made by Patten DCJ on 15 March 2002, and Gibson DCJ on 24 April 2003; in current District Court proceedings between the parties. Mr Jones's bill of costs totalled $42,524.09. The plaintiff, Mr Khera disputed the entire sum of $42,524.09. That is, he did not make any concessions at all. On 30 January 2004, the costs assessor determined, by assessing as a fair and reasonable amount of costs to be paid to Mr Jones, the sum of $22,099.71, ie, almost half of the amount of costs claimed. 10 I shall start with the plaintiff's submission that the costs assessor denied him procedural fairness in that he did not provide him with an opportunity to examine the documents submitted by the defendant and allow him to make submissions in relation to such documents. The role of a costs assessor is relevantly set out in s 208 which reads: "208 Consideration of applications by costs assessors

(1) A costs assessor must not determine an application for assessment unless the costs assessor:

(a) has given both the applicant and any barrister, solicitor or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application, and

(b) has given due consideration to any submissions so made. (2) In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit." 11 The costs assessor wrote to the parties referring to his obligation under s 208 and requested that any written submissions or any further written submissions by the respondent, including identification of items in the bill of costs to which there is objection and the reason for such objection, be supplied within 14 days. In the event that there were any written submissions or any further written submissions by the respondent, the costs assessor required that the applicant respond to those written submissions within a further 14 days after receipt from the respondent. The costs assessor left it open as to whether, after receipt of each party's documents, he would require any further submissions and if he did, he would require those submissions from both parties. 12 Hence, it is my view that the costs assessor discharged his obligations under s 208. The costs assessor is not obliged to grant access to a party (who still has litigation pending with his opponent) to inspect all of the opposing party's documents.

Professional costs of solicitor acting for himself 13 The gravamen of the plaintiff's concern in this appeal is that Mr Jones was allowed professional costs for work done as a solicitor. The plaintiff submitted that Mr Jones was not entitled to any remuneration for the work he did. Alternatively, the plaintiff submitted that the costs assessor allowed an excessive sum. The actual sum assessed is a question of fact, not law. However, Mr Jones claimed $300.00 per hour and this was reduced by $50.00 per hour. The costs assessor allowed Mr Jones an hourly rate of $250.00. 14 According to the plaintiff, the reasons why Mr Jones was not entitled to the costs he seeks are: firstly, he is not a solicitor conducting his own legal practice; secondly, Mr Jones does not have an office, staff, professional indemnity insurance and other overheads which solicitors are known to have; thirdly, Mr Jones is not employed as a solicitor and so far as Mr Khera was aware, Mr Jones had not been employed as a solicitor since about July 2002; and fourthly, Mr Jones was employed as a solicitor until about June 2002. 15 Mr Jones drew costs assessor's attention to authorities and submitted that there is an exception to the usual rule that a litigant is not entitled to the costs of acting for himself, that exception being the rule of practice that a solicitor is entitled to the legal costs of acting for himself because those costs can be calculated by the court and its officers while a layman's cannot be. In his submission to the costs assessor, Mr Jones referred to Atlas Corp Pty Ltd v Kalyk [2001] NSWCA 10, Guss v Veenhuizen (No 2) (1976) 136 CLR 47 and Cachia v Hanes (1994) 179 CLR 403. Mr Jones added that Mr Khera did not draw the costs assessor's attention to any case supporting his submission that a solicitor is not entitled to their costs in any situation when acting for themselves. 16 Details of Mr Jones's employment history are contained in his letter to the costs assessor (letter 29/12/03, Bundle, tab 7 p 60) stating: "I was last employed as a senior solicitor until 26 April 2002. My charge out rate at that time was $300 per hour plus GST. I have been unemployed since that time but have been working 10 to 30 hours per week as a solicitor in acting for myself in a number of legal proceedings and disputes, in collecting debts from my old Avalon practice, in carrying out my duties as Receiver and Manager of Kheras The Law Firm, in seeking employment and following up practices for sale or partnership opportunities, and in other activities associated with being a solicitor. Much of the time spent in acting for myself has been in the current District Court proceedings with Mr Khera, or in other litigation or disputes involving Mr Khera or his wife." 17 In Guss, a solicitor did not claim costs incurred by him in retaining the professional services of a solicitor in his litigation. He appeared in person and sought taxation of costs on the basis that he was a solicitor who acted for himself and did so according to the well established rule of practice which entitles a person, being a solicitor, to certain professional costs in those circumstances. The registrar disallowed the solicitor's costs. The rationale in allowing these costs is that professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity, or the nervousness of the individual. The High Court held that professional skill is allowed for in taxing a bill of costs. It was also held that a solicitor is also entitled to not only his professional costs, but also to his outgoings, be they filing fees or fees paid to counsel properly briefed. 18 The decision of Cachia is one that involves the costs that a litigant who is not a solicitor can recover. 19 In Kalyk the NSWCA held at [9], that: "… although solicitors representing themselves in litigation have no need of any indemnity against professional costs paid or payable to another practitioner, there is still scope for the indemnity principle. Such solicitors will have spent time and trouble representing themselves and, to that extent, they will have lost the opportunity of using that time doing professional work for other clients and being remunerated accordingly. The indemnity in the case of solicitor litigants is, therefore, against the opportunity cost rather than the direct cost of their professional time spent on their own case." 20 At para 3(b)(iv) of his reasons, the costs assessor stated that he was satisfied that the costs applicant [Mr Jones] carried out the practice of a solicitor and, subject to the provisions mentioned in para (3)(a)(iii), was entitled to his reasonable costs of acting as a solicitor. At para (3)(a)(iii) the costs assessor stated that he considered that a charge out rate of $300.00 per hour plus GST was excessive in District Court proceedings notwithstanding their complexity, and allowed costs at $250.00 per hour plus GST. 21 In accordance with Guss and Kalyk, the costs assessor was correct in allowing Mr Jones's professional costs assessed at an hourly rate of $250.00.

The plaintiff submitted that the costs assessor should not have allowed a claim for briefing Mr Wheelhouse to advise in conference in the absence of any supporting evidence from counsel. Mr Jones explained that, at the time of filing the bill of costs, Mr Wheelhouse had not rendered a bill. There was no disbursement relating to the conference and no charge made for this in the bill of costs.

The costs assessor stated at para 3(b)(xv): "I consider that the briefing of Mr Wheelhouse of Counsel to advise in conference was reasonable having regard to the nature of the dispute and the allegations." 22 There is no error of law.

Fees for drawing the bill of costs 23 The plaintiff also submitted that the costs assessor erred in allowing $3,841.05 towards disbursements for D G Thompson's costs under the circumstances where the bill prepared was grossly excessive and was substantially reduced. This is a question of fact not law. In any event, in the review panels decision at para [7] the panel noted: "One of the letter from the Review Respondent dated 15 March 2004 noted that, after the costs assessor's determination was issued, the Review Respondent received a refund of $952.49 from D.G. Thompson against the $3,841.05 allowed by the costs assessor. This refund has been shown as a credit in favour of the Review Applicant in the Form 9 Certificate." 24 The refund was made after the bill was assessed and there has been a reduction in D G Thompson's fees.

Costs of the assessment 25 Finally, the plaintiff submitted that the costs assessor misdirected himself as to the appropriate law and erred by finding that the plaintiff failed to make an offer of settlement to pay the defendant's costs. According to Mr Khera, in the absence of a proper bill of costs as required by the Act, the plaintiff could not consider the bill of costs and make a considered offer of settlement. Mr Jones made offers of settlement on 19 September 2003, 8 December 2003 and 24 December 2003. Mr Khera never responded. He, as a solicitor, would have been in a position to make an offer if he wished to do so. He did not. The costs assessor was entitled to make this order particularly where Mr Khera placed every item in the bill in dispute. There is no error of law.

As previously stated, the plaintiff submitted that the Costs Review Panel failed to consider and hold that the document purposed to be a bill of costs forwarded to the plaintiff through the defendant's letter dated 30 August 2003, was not a bill of costs because the said document was not dated and not signed or was not attached to the said letter dated 30 August 2003, and this constituted an error of law. The plaintiff has consistently proffered his view that the bill of costs was not a bill of costs under s 194 of the Act. Mr Jones had signed the covering letter forwarding the bill of costs. Section 194 provides that it is sufficient compliance with this section if the letter attached to the bill of costs is signed. The costs assessor, once appraised of Mr Khera's view, advised him in writing that it was a bill in accordance with s 194. It is difficult, in the light of the clear words of s 194, to understand why Mr Khera still holds this view.

GST 26 Mr Khera's submission that the review panel allowed $250.00 per hour plus GST is incorrect. At para [3] of their reasons the review panel disallowed the sum of $1,596.22 for GST on the basis that the solicitor cannot be regarded as supplying himself. 27 Finally, for completeness, Mr Khera's reference to the panel allegedly breaching the principles of procedural fairness by failing to take into consideration Ex 15 p 154 subparagraph 4(a), is a reference to the costs assessor not giving the parties an opportunity to make submissions or for him to inspect his opponent's file, I have already covered this topic in my judgment. 28 The balance of Mr Khera's submissions as to errors by the review panel relate to decisions by the costs assessor that I have already considered and have decided that the costs assessor was correct. Hence, there was no error of law made by the review panel. 29 It is also my view that both, the costs assessor and the review panel, gave detailed reasons for their decisions. The costs assessor conveniently grouped the plaintiff's objections into subject matter. There has been no error of law. The appeals are dismissed. The decisions of the costs assessor dated 30 January 2004 and the Costs Review Panel dated 6 May 2004 are affirmed. The amended summons filed 5 November 2004 is dismissed. 30 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

(2) The decisions of the costs assessor dated 30 January 2004 and the Costs Review Panel dated 6 May 2004 are affirmed.

(3) The amended summons filed 5 November 2004 is dismissed.

(4) The plaintiff is to pay the defendant's costs as agreed or assessed. **********

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